Visteon OKs deal to return plants to Ford

DETROIT -- Visteon Corp. moved a step closer to declaring its independence from Ford Motor Co. last week with the signing of a deal for Ford to take back 23 money-losing Visteon plants.

That's a double-edged sword for Visteon, says Kevin Tynan, senior analyst at Argus Research Group in New York. While Ford absorbs the $3 billion cost of the plants and about 23,000 salaried and hourly employees, Visteon loses its financial lifeline. Ford previously has bailed out Visteon to the tune of $2 billion.

When the operations are returned to Ford, scheduled for Oct. 1, Visteon's revenue, on an annualized basis, will drop from about $18.7 billion in 2004 to $11.4 billion this year. Ford's share of Visteon's sales will drop from 64 percent to 50 percent.

But that's still high given Ford's declining market share. And Visteon's next-largest customer is General Motors - another automaker whose U.S. market share is shrinking.